Colorado marijuana legalization plan at risk from federal tax, banking rules

Officials at the Department of Justice in Washington, D.C., are examining Colorado’s plan to regulate the recreational use of marijuana amid concerns in the state that federal banking and tax rules could thwart new pot-based businesses. 

{mosads}The 166-page implementation plan drawn up by a state task force calls for modifications to federal tax and banking regulations, among dozens of other recommendations.

Made public last week, the document lays out a regulatory framework intended to comply with the state’s Amendment 64, which makes it legal to smoke, possess and grow limited quantities in Colorado.

“We are sharing the report so that the federal government can understand how Colorado is moving forward to implement Amendment 64,” said Eric Brown, a spokesman for Colorado Gov. John Hickenlooper (D).

In the report, the task force acknowledges regulatory barriers at the federal level that could stand in the way of marijuana businesses in Colorado.  

For example, financial institutions, are subject to federal regulation. 

“Since marijuana is a controlled substance under federal law, banks must either refuse to hold accounts for legal marijuana businesses in Colorado or risk prosecution,” the task force wrote.

The panel recommended that the state approve a resolution urging the federal government to exempt legal marijuana businesses in Colorado.  

Also included in the task force’s 58 recommendations is a call to amend a portion of the federal tax code that, as currently written, would bar legal Colorado marijuana businesses from claiming deductions. 

The Justice Department has been silent on its stance toward Amendment 64 and a similar measure passed in Washington state. Earlier this month, Attorney General Eric Holder said the agency is looking at the statutes and would announce its formal policy “relatively soon.”

On Tuesday, federal prosecutors confirmed they are examining the details of the two laws.

“The U.S. Attorney’s Office in Colorado continues to work with the Department of Justice in Washington as well as the U.S. Attorney’s Office in Washington state as the department reviews all aspects of the marijuana legalization initiatives,” said Jeff Dorschner, a spokesman for the U.S. Attorney’s Office in Colorado.

Justice Department officials in Washington, D.C., did not immeditately comment on the Colorado report. 

Tags Eric Holder

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